I've been reviewing the latest public musings on the credit market with
interest. As Overseer of Ashtan, I keep a careful eye of the various
trends within Sapience and I feel that there are some misconceptions
about what the credit market is, its effect on the economy, and credit
reselling.

Ever since the credit market was established, the average price of
credits has been increasing, ergo, the credit market is to be blamed for
the increase in credit price, right? Wrong. The credit market, just like
any other market, is simply a way to bring buyers and sellers together.
By itself, it should lower the price of credits, not increase it, since
it makes buying and selling easier. IE if you're selling pigs, and you
have a pig market, you dont have to spend time looking for buyers,
decreasing your cost, letting you sell pigs at a more attractive (read
lower) price.

But what about the resellers, they're taking all the credits for profit,
you say. Well the truth of the matter is reselling, whether it be herbs
or credits, is a tenuous business. If you overcharge your customers,
you'll rapidly find yourself with no customers. It's true that resellers
have a slight inflationary affect on credit prices, but resellers have
existed long before the credit market was ever implemented, they are not
a new phenomena and have been part of the demand side of the credit
market for a while.

Furthermore, taken to its logical conclusion, if spiralling credit
prices are solely to be blamed on credit resellers who essentially buy
each others credits at ever decreasing profit margin, someone will
eventually reach the marginal rate where there is no profit to be made.
In other words, someone's going to be left holding the bag, having
bought the credits at too high a price without a customer base to resell
too. Now, holding personal judgement aside, credit resellers are smart
businesspeople (at least the ones who can stay in business are
marginally intelligent). That being the case once the price for credits
reach market cost, its not a smart investment as an intelligent wealth
seeker to purchase the credits.

Let me also pause here to reassure everyone that Ashtan is not suffering
any sort of 'credit crisis.' Not that a city has any sort of need for
credits except as a fund raising tool, so the idea of a credit crisis
when applied to a city is just odd. The truth of the matter is, Ashtan
is a growing and prosperous city, and we sell credits every Achaean
year, with one exception. In my experience thats 50 to 100% (thats one
and a half to twice as much) more often then my predecessor as Overseer,
Shakti, sold them, hardly an indication of a crisis. The exception was
caused by a huge credit expenditure by Ashtan to build a 20 room warp
hub, once again, not an indicator of credit weakness if anything that
shows fiscal (credit?) strength.

That being said, what *is* the cause of the increase in cost within the
credit market? Consider this, right before the credit market was
instituted, there was a credit sale. That means that there was an
abundance of credits at the time, high supply - low prices, one of the
cornerstones of economics. Also take into account the increased growth
of Achaea as a whole. Five or so Achaean years ago, we would have 370
people or so during peak times. Now, we have up to 450 people. Doing the
math, 450/370 is 121.62%, a huge increase. So what it comes down to, is
that prices are going up, because well, demand is up and supply is down,
hardly a revelation eh? 😛

Skarash Azon,
Overseer of Ashtan
and part-time economist 😛

Penned by my hand on the 4th of Scarlatan, in the year 336 AF.